Homestays and Trust

We’ve done several homestays when we go on vacation ever since the kid arrived. Mostly because it gives access to a kitchen thereby giving a higher chance that the kid might eat something rather than nothing. But I always wondered why anyone would rent a room/home to a complete stranger without having met them?

Airbnb, a software company (and site and app) answers my question, at least for the West. It puts together people who want to rent a room (or house) with someone seeking said room (or house) for a short while. Like when you visit a new place or go on a short work trip. That’s somewhat similar to Uber putting riders and drivers in touch.

It’s supposed to be a win-win: the sublessor makes some money; the sublessee gets a home like environment or cheaper than hotel stay. As you might expect, hotels aren’t exactly thrilled with Airbnb. Others complain that people prefer putting their houses on Airbnb rather than renting them out the old fashioned way since short term rents are higher than longer term leases!

You might be wondering why anyone would rent a room or house to a complete stranger? How would a newcomer to a city know which home to go with?

Valid questions. And the theme there is the word: trust.

Both parties rate each other via the Airbnb app at the end of the experience. If your home is good, you get good ratings, others see that rating and come to you. If you are a good lessee, you get good ratings, and renters are willing to lease out to you. And so, as Ben Thompson writes:

“In the pre-Airbnb days travelers — and sublessors — justifiably prioritized trust above all else. In other words, the implication of Airbnb building a platform of trust is not that a homestay is now more trustworthy than a hotel; rather, it’s that the trust advantage of a hotel has been neutralized allowing homestays to compete on new vectors, including convenience, cost, and environmental factors.”

And:

“Staying in a hotel would not only be too expensive, it would also deny me the opportunity to at least get a taste of what it’s like to live day-to-day in a different country and culture — something you don’t get at your typical branded hotel.”

Of course, the Airbnb story doesn’t answer the India homestay trust question I asked at the beginning of this blog. So that’s still a mystery to me…